The Clock Is Ticking

February 10, 2016 5:22 AM

The clock is ticking...ten days ago, our landlord warned us the house we're renting will become a pile of rubble after March 31st, so we better be out by then. Good news: we already had a (small) down payment on a house saved up, got pre-approved for a mortgage from our bank, and we accepted a seller's counteroffer and signed a purchase agreement on a house well within our budget. What can we do to keep things in our timeline?

We could get another rental, but this is the second time in ten years we've suddenly been thrust into fearing homelessness due to a rental being sold out from under us, so we're trying to avoid this again in the future by buying a house, which was already in our plans, just under a tighter timeline than planned.

A contingency of the purchase contract is closing a week before we have to be out of our current home, for moving time, and our banker and realtor both assure us that it should be doable (over 40-some days). But, if things fall apart at that time, then we'll be praying for a hail mary with only a week to go to find another rental or a cheap-by-the-week hotel until we can get things straightened out. Again, banker and realtor both assure us, no, don't worry, it's a slow time of year so the title companies and appraisers aren't busy. We're not doing an inspection (we trust the appraiser will be at least as thorough, this is a FHA or USDA backed loan), so aside from some remaining paperwork for the banker, our part is pretty much done until closing, we're waiting on others to get things done.

So, is there anything we need to watch out for that might delay things, or any tips and tricks for getting others to accomplish things expeditiously? We don't want things sloppy, we just want things swift. Any ideas? Thanks!

posted by AzraelBrown to Work & Money (19 answers total)

We're not doing an inspection (we trust the appraiser will be at least as thorough, this is a FHA or USDA backed loan)

Don't let your fear drive an imprudent decision. A home is the most expensive investment people make and you can't afford to jump into it without ALL of the due diligence. If you're not doing an inspection because of the price, you can't afford to own a home. What did your realtor say about this?

If there's an option to do an inspection, DO IT! Even if the deal isn't contingent on a good inspection, do one. It's in your best interest. Don't you want to know if the roof is in good shape? What about the HVAC? These are all high ticket items that if they fail, you're going to be in a world of hurt. The appraiser won't look at any of that because it doesn't affect the price of the home.

The appraiser only confirms that based on recent sales in the area, and the square footage of the home conform to standard pricing.

If you knew that $20,000 worth of items in your home were on their last legs, wouldn't you want to renegotiate the terms of the deal? What if the foundation was cracked? What if your sewer pipe needs to be replaced (this happened to us, wish I had paid extra for a camera down the pipes.)

So that's the huge red flag that's waving in front of my face.

If the deal falls through, easy. Put your stuff in storage and go into temporary housing, scope out an Extended Stay or Motel 6 Extended Stay. It will give you peace of mind should things go to shit.

But I can't encourage you enough to have a thorough inspection.
posted by Ruthless Bunny at 5:50 AM on February 10, 2016 [30 favorites]

Best answer: That's a tight timeline for the closing but not impossible. We had a similar timeline of about 30 days or so because the mortgage broker said we could get a better interest rate on the loan for a faster closing but then turned around and "forgot" that he said that and proceeded to freak out and complain about how the Dodd Frank Act was screwing things up for him.

Anyway, it all worked out even though the appraiser hired by the bank just didn't show the first time and we were sure the sellers' agent was trying to torpedo the deal.

The point is that it is doable as long you can react to the bank's and broker's questions and demands quickly. Paperwork missing? get on it right away, fax it over, drive it over if you have to. Of course the usual stuff: don't transfer any large amounts of money around, don't buy a car right now etc... You need to stay on top of these people because they may not be the most motivated or competent players in the game. YMMV.
posted by eatcake at 5:55 AM on February 10, 2016 [1 favorite]

We're not doing an inspection (we trust the appraiser will be at least as thorough, this is a FHA or USDA backed loan)

I know this is a derail from your question, but as RB says, appraisal and inspection are totally different. And FHA appraisal might include some things that need to be repaired prior to the closing, but they do not "inspect" the house by any stretch of the imagination. (In my home purchase, he pointed out a heaved sidewalk that was a "trip hazard" that was required to be fixed before closing.) So, yes, get an inspection.

To your actual question: If you can't close in time, you might be able to rent the house you are buying prior to closing, paying for the number of days on a pro-rated basis. This would be outside the purchase contract, and you do run a risk that if the closing falls through you would have to move out right away. But I have done this as both a buyer and seller at least once.
posted by The Deej at 6:02 AM on February 10, 2016 [6 favorites]

Response by poster: Yeah, the inspection thing is a derail -- I'm handy, I do have a very good handle of the house's status which I could go into but isn't worth the space here, and I've heard enough horror stories about people whose FHA loans fell through because the appraiser found things like peeling paint or a remodeled basement they didn't like, that I believe the appraiser will find anything I've missed.

Edit: also, regarding extended stay hotels: we've got a dog, two cats, and a bird, which complicates things, both with waiting for a closing and a hunt for a new rental. But, yeah, we know that might be an option but it's what we're trying to avoid with this question.
posted by AzraelBrown at 6:08 AM on February 10, 2016

You can always put your things in storage and stay in an extended-stay hotel while the house is finalized. And most of the time, extended-stay hotels are cheaper than monthly rent in the first place!
posted by TinWhistle at 6:08 AM on February 10, 2016 [5 favorites]

Best answer: I would definitely have short-term backup housing lined up, just in case--I've purchased two houses now, and both times something went haywire and delayed the closing. Things have been lost; the seller forgot to submit paperwork; somebody filled out a form incorrectly; etc. Do not trust the bank on this.
posted by thomas j wise at 6:09 AM on February 10, 2016 [3 favorites]

Best answer: Have a back-up plan. We closed on our house on time (30-ish days) but the jackasses who we bought it from didn't bother moving out for a week and there was NOTHING we could do about it. (Steam literally came out of my ears. I have witnesses.) Have a back-up plan in case something just goes sideways.
posted by PorcineWithMe at 6:33 AM on February 10, 2016 [4 favorites]

Best answer: Make sure you stay on top of things that the bank requires from you. I've done real estate work for 20 years now, and there have been times when closings were delayed because the buyers didn't get paystubs, tax returns, homeowners' insurance, etc., to the mortgagee.
posted by Lucinda at 6:54 AM on February 10, 2016 [1 favorite]

Best answer: I went through something like this last year. We completed the entire homebuying process – from “should we check out this house?” to moving in – in about two months. There were no realtors on either side so you have a leg up on us.

- Tell everyone involved about your deadline and desire to close ASAP. Sounds like you did this already.
- Gather all applicable paperwork: paystubs, tax returns, bank statements, etc. Get it all scanned in and be prepared to send it as soon as requested. You’ll need this stuff from your partner too.
- Homeowners insurance. Get the ball rolling on that.
- Check with your lender if there are any required inspections. Ours required a termite inspection. Do those.
- Be ready to explain ANY unexplained income. I mean ANY. Remember that check for $150 your friend gave you nine months ago to repay you for some concert tickets? They’re going to ask about it.

Honestly, it sounds like you are in good shape. Communication is key. If your lender / realtor needs a piece of information, get it to them within an hour. Ask if there’s anything you can do on your end to help speed up the process. You got this!
posted by Diskeater at 7:56 AM on February 10, 2016 [2 favorites]

Best answer: Motel 6 has extended stay and they're pet friendly.

That said, as long as your money is good, there's not a lot of stuff that you can do to move the process along. Get your appraiser out there earlier rather than later. Most can come out on a couple day's notice, especially in the winter. If there are repairs that need to be done, or if it doesn't appraise for what the mortgage is, you want to know as early into the process as possible.

Again, you will do a walk through when you go to close. If ANYTHING is amiss, don't close. If they take the appliances, if they haven't moved out, if they took the draperies and the chandelier when it specifically said in your contract that they were supposed to stay, refuse to close until it's remedied or until they pay you to replace said items.

Your refusal to close due to a breech of the contract on their part is your leverage. Right now, they're sweating you way more than you're sweating them.

Another thing, keep as much extra cash at the ready as you can amass. Have a few thousand in an account you can liquidate the day of closing. All kinds of crazy shit comes up at the last minute, "Oh, we forgot the doc stamps fee!" You may need that. You will get documentation of the exact amount to bring to closing, in a Cashier's Check, within 24-48 hours before closing. Everything prior to that is a good-faith-estimate. Having extra dough can help in a very stressful time.

Your loan will fund the day of closing, often AFTER you arrive at the office to sign the paperwork. Nothing will proceed until that loan is funded. Close as early in the week and as early in the day as you can arrange. It would seem to be ideal to close at 3:00 PM on a Friday, but what if the loan doesn't fund? Then you're stranded all weekend.

If you can overlap by a week, that's ideal. That gives you time to move a lot of your stuff to the new house before the official moving day.

Take as much time off of work as possible, trying to do all of this while being sharp at work is a near impossibility.
posted by Ruthless Bunny at 8:14 AM on February 10, 2016 [3 favorites]

I agree that you should have a backup plan, but I think you won't have to use it. In my non-vast experience, the one house I bought was right on schedule, move-in when we requested, no problems at all. But if I were in your situation and didn't have a backup plan I'd worry myself into insanity, so have a plan.
posted by aimedwander at 8:54 AM on February 10, 2016

Basically, this will largely come down to the competence of your mortgage broker and realtor. They should have teams assembled whom they know can act fast ("we need that report by five, can you make that happen?").

What is your landlord like? Your backup plan in the event of a very short delay could be to request to pay an additional few days of rent, or to simply not vacate and expect that the eviction process won't be instantaneous.

I also agree with the derail about the importance of a complete set of inspections. You're handy, but for instance, do you have one of those sewer pipe imaging cameras? (I guess I don't know if root intrusion is a big $9-12k issue in your housing market.) I would expect the FHA appraiser to catch "health and safety" items, but I don't think there's a complete overlap between that and what a traditional inspector would catch. When I have bought, it's always felt worthwhile to not just have a general building inspection but to add specialist sewer, HVAC, and chimney inspections.
posted by slidell at 9:59 AM on February 10, 2016 [1 favorite]

Response by poster: What is your landlord like? Your backup plan in the event of a very short delay could be to request to pay an additional few days of rent, or to simply not vacate and expect that the eviction process won't be instantaneous.

We're not being evicted; our lease was not renewed -- and there's not going to physically be a house to live in for any additional days. The landlord sold our property, and two adjoining others on the same block to a developer who's flattening everything and building a large apartment complex. That's what's most anxiety-driving about this: we can't even be illegal squatters, because the house simply won't exist. Landlord has said that the bulldozers will be parked on our lawn, ready to knock things down as soon as his closing happens, a'la the start Hichhicker's Guide To The Galaxy, and we're in no position to try and call his bluff.
posted by AzraelBrown at 10:06 AM on February 10, 2016

Best answer: Can you arrange with the sellers to move in on [DATE] regardless of closing with an agreement to pay rent from [DATE] until closing?

This is a thing people do. The sellers are planning to move, or they would not be selling, so it's likely the house will be empty/ready for you to move in by the intended closing date, regardless of whether that gets pushed back or not. It's something to ask your agent, at any rate, if you can draw up an agreement for possession on [Intended Closing Date] regardless of [Actual Closing Date] with you to pay $XX/day in rent from the date of possession until closing.
posted by crush-onastick at 10:56 AM on February 10, 2016 [4 favorites]

An appraisal is not the same as an inspection. When we got our condo appraised, the appraiser did not even come inside our building. I know in crazy markets like San Francisco area buying a place without getting an inspection is How Things Are Done but I think I'd give serious pause to that idea.

This sounds stressful and my mortgage is not through FHA but my husband and I closed in maybe 25 days. I want to take credit for that and say that is because we are so smart but I think we got lucky. Do you know if the sellers have their next home lined up? That was a concern for us at one point. But if you need to put a bunch of stuff in storage and rent an Airbnb for a month or something, I think that's NBD. Especially when the alternative is pushing the loan through and finding out later that an inspection would have revealed the foundation and roof each need $50,000 of repairs.
posted by kat518 at 11:23 AM on February 10, 2016 [1 favorite]

When we were shopping houses in November, we were told that due to recently-adopted regulations the standard close time was 45 days, maybe 30 if the lender had already done all of the due diligence first.
posted by slidell at 4:31 PM on February 10, 2016

I would look into pet friendly hotels and book something with a good cancellation policy. Then find a pod storage place, check their cancellation policy and book a pod for the last week of March. I used a pod for short term storage, and it was great, as you only have to pack once! Also, if there's a sudden change of plan, they can take the pod to your new house instead of into storage, or vice versa.
posted by kjs4 at 4:43 PM on February 10, 2016 [1 favorite]

Another thing, keep as much extra cash at the ready as you can amass. Have a few thousand in an account you can liquidate the day of closing. All kinds of crazy shit comes up at the last minute, "Oh, we forgot the doc stamps fee!" You may need that. You will get documentation of the exact amount to bring to closing, in a Cashier's Check, within 24-48 hours before closing. Everything prior to that is a good-faith-estimate. Having extra dough can help in a very stressful time.

Your loan will fund the day of closing, often AFTER you arrive at the office to sign the paperwork. Nothing will proceed until that loan is funded. Close as early in the week and as early in the day as you can arrange. It would seem to be ideal to close at 3:00 PM on a Friday, but what if the loan doesn't fund? Then you're stranded all weekend.

You'll actually get all the paperwork a full 72 hours before closing now, due to new reporting requirements (and it's easier to read than it used to be). If they do anything that increases your closing costs after that, they're required by law to reissue everything with another 72 hour period. It's a pain for lenders (who are ALL used to having that leeway) but they're already getting good about quoting accurate numbers the first time, because otherwise people's rate locks expire and things get really messy. (We just refinanced and because of existing travel plans and holidays we had to close the day our rate lock expired, and it was actually completely fine. Our loan was underwritten a full week before our closing date).
posted by fedward at 5:27 PM on February 10, 2016

Response by poster: Update for anyone still following along:

Everything was going swimmingly, until the bank decided they didn't like the appraisal and didn't like the property and would under no condition give us a loan on it. Well, after back-and-forth between our banker, the appraiser, and the lender, maybe they would give us a loan if we put a lot more money down, but we don't have that sort of budget so we didn't push back any further. Back to the drawing board -- we did find a temporary place to live, picking up the last 4 months of a lease so the current renters can get out of their lease, which should give us a comfortable window to keep house shopping. Thanks for the advice!
posted by AzraelBrown at 12:35 PM on March 22, 2016 [3 favorites]